Did you spend a little more than you budgeted on holiday presents this year? With so many “Door Buster” deals and savings, retailers trick you into thinking the more you spend, the more you save, but we know that’s not the reality.
According to data released by the Federal Reserve, U.S. credit card debt has reached a record high of $1.021 trillion, an all-time high that now surpasses the record that was set about a decade ago.
Roughly seven in 10 adults in the U.S. have at least one credit card in their wallet and with the national average annual percentage rate (APR) for new card offers at an all-time record high of 16.13%
If used properly, credit cards can actually be a useful tool to help us save money over the long haul by increasing our credit scores into the “excellent” or “good” category, improving our choices when we need a loan, as well as, providing lower interest rate options, which over the long run could be saving you thousands or tens of thousands of dollars.
The problem is the new record high APRs should serve as a wake-up call to consumers who don’t keep a watchful eye on their debt and spending habits. Many people feel like their debt is manageable right now, but in reality, could be one emergency away from real trouble.
There are things you can do to help yourself stay on top of credit card debt.
Implement a Household Budget
Without a budget, it’s very difficult to get a good understanding of your cash flow, and without understanding your cash flow, you can’t optimally adjust your spending and saving habits.
Be Prudent About Your Credit Usage and Pay Your Bills On-Time
Your priority and ability to make payments on time, and utilizing less than 30% of your aggregate credit available, combine to account for about 65% of your credit score. Remember, a higher credit score gives you a big bargaining chip.
At the end of the day, your goal should be to create smart spending habits so you have a good chance to avoid becoming an unwanted credit card statistic.
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